Get an in depth understanding of IVA and Scottish Trust Deed here

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Get an in depth understanding of IVA and Scottish Trust Deed here

Debt management solutions have established a very important place in today’s world as feasible escape routes for the debtors who are not able to bear the burden or repayment of debt with interest, as well as a route for the creditors to make sure that the debtor becomes legally obligated to repay the debt.

Although traditionally debt management solutions such as an Individual Voluntary Arrangement or IVA in England, Wales and Ireland and a Scottish Trust Deed in Scotland have been seen to be beneficial for the debtor, in reality they are also preferred by creditors. The reason behind this is that without recourse to such debt management instruments, all that the creditors can do is to force the debtor to be declared bankrupt. However, this does not really bring back the money they have loaned to the debtor. On the other hand, signing an IVA or Trust Deed in favour of the debtor ensures that although the debtor may take a longer period of time to pay back the debt, at least the money will be returned to them.

The two most popular debt management instruments in the United Kingdom are Individual Voluntary Arrangement or IVA and a Protected Trust Deed. Both these instruments are almost similar in every aspect as far as their basic features and working is considered.Both the instruments also provide the same kind of solution and are generally seen as a last resort to repayment of debt and maintaining some sort of credit standing as compared to the absolute loss situation of being declared bankrupt. However, the only difference between the two instruments is the geographical area in which they are available.

Individual Voluntary Arrangement

An IVA is a popular debt management solution in England, Wales and Northern Ireland. The basic arrangement of an IVA involves a formal agreement between the debtor and his creditors to pay the debt amount in equal monthly instalments over a period of time. This agreement can be executed only by a licensed Insolvency Practitioner. To learn more about the services of an Insolvency Practitioner along with the fees charged by him, you can visit IVA company website of the Insolvency practitioner you have been recommended.

The best part about entering into an IVA is that the debtor is able to reach an understanding to pay a fixed monthly instalment towards his debts. The amount of this monthly instalment is also decided by the debtor himself according to what he can afford out of his earnings. The total term period of the IVA depends on the amount of debt. However, generally an IVA is entered into only when the amount of debt is high and therefore the arrangement lasts for at least 3 to 5 years.

Some other advantages of entering into an IVA are that it is easy to set up with a more than 90% approval rate and all the interest charges are frozen as soon as the IVA is signed. This essentially means that you would be required to pay only the main debt amount without worrying about increasing rates of interest.

Protected Trust Deed

Also known as a Scottish Trust Deed, this debt management instrument is available only to the residents of Scotland. In essence, it is the same as an Individual Voluntary Arrangement but it does have a minimum eligibility criteria of 5,000 Pounds as debt before an Insolvency Practitioner will consider you for a Scottish Trust Deed.

When you think of entering into a Scottish Trust Deed, the first step that needs to be taken is to assess the value of your assets, your monthly earnings, your living expenses and the total amount of debt that you owe. It is only after analysing all these factors that an Insolvency Practitioner can recommend whether a Trust Deed is the best possible solution for you. However, before taking advise of an expert, you can also make an approximate calculation of your eligibility and your monthly instalment to pay by using a Trust Deed Calculator. To access this unique service, visit the trust deed calculator website here.

The overall working of the Trust Deed is same as that of an IVA i.e. a monthly payment of a fixed instalment towards debts while the some part of the amount is written off by the creditors and interest is frozen. You can choose either of these two instruments for a more organized and peaceful method of repayment of debt.